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Tech companies are clamoring to give you credit cards

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Re: Tech companies are clamoring to give you credit cards

#21

Post by cashewchoo »

toomuchtodo wrote: post #10
est31 wrote: post #7

The entire idea behind credit cards is to force processing fees upon store owners. As a store owner you are required to pay up to 3.5% of your revenue to the processing company (the percentage can be even higher than that if you sell stuff for small amounts, like just a dollar). With cash you can choose your bank and there is more of a free market, while with credit cards you can't get around not accepting certain br…

If the US regulated interchange fees like Europe did (In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards, no cap for corporate cards), everyone would still get the benefit of cashless transactions without the processing rake credit card processors and related entities take.

Worth noting that credit card processors do take on credit risk, which for "normal people" is, sure, basically negligible. But black swan events (covid, for example) and fraud attacks (card cashers etc etc) are major issues.

This might be mitigated by the dominant form of payments in the regulated marks you mentioned being debit cards, which in some ways flips the equation on risk around.

However, this might not sit well with consumers. Lots of people in the US like credit cards because of the substantially superior risk profile they present (to the cardholder).

Re: Tech companies are clamoring to give you credit cards

#22

Post by yjftsjthsd-h »

cashewchoo wrote: post #21
toomuchtodo wrote: post #10

Earlier quoted context omitted.

If the US regulated interchange fees like Europe did (In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards, no cap for corporate cards), everyone would still get the benefit of cashless transactions without the processing rake credit card processors and related entities take.

Worth noting that credit card processors do take on credit risk, which for "normal people" is, sure, basically negligible. But black swan events (covid, for example) and fraud attacks (card cashers etc etc) are major issues. This might be mitigated by the dominant form of payments in the regulated marks you mentioned being debit cards, which in some ways flips the equation on risk around. However, this might not sit…

> Lots of people in the US like credit cards because of the substantially superior risk profile they present (to the cardholder).

How so? Fraud liability?

Re: Tech companies are clamoring to give you credit cards

#23

Post by toomuchtodo »

cashewchoo wrote: post #21
toomuchtodo wrote: post #10

Earlier quoted context omitted.

If the US regulated interchange fees like Europe did (In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards, no cap for corporate cards), everyone would still get the benefit of cashless transactions without the processing rake credit card processors and related entities take.

Worth noting that credit card processors do take on credit risk, which for "normal people" is, sure, basically negligible. But black swan events (covid, for example) and fraud attacks (card cashers etc etc) are major issues. This might be mitigated by the dominant form of payments in the regulated marks you mentioned being debit cards, which in some ways flips the equation on risk around. However, this might not sit…

Let merchants charge customers the credit transaction fee as a surcharge [1] [2], and let consumers pay to receive the benefits if they so desire. Everyone else can use debit cards now, and instant payments when they arrive in 2023-2024 [3] [4]. If it's transaction insurance customers demand, let them vote with their dollars (versus mandating everyone pay it as a transaction tax).

[1] https://usa.visa.com/dam/VCOM/download/merchants/surcharging...

[2] https://www.mastercard.us/en-us/business/overview/support/me...

[3] https://news.ycombinator.com/item?id=24103753

[4] https://www.federalreserve.gov/newsevents/pressreleases/othe...

Re: Tech companies are clamoring to give you credit cards

#24

Post by stefan_ »

cashewchoo wrote: post #21
toomuchtodo wrote: post #10

Earlier quoted context omitted.

If the US regulated interchange fees like Europe did (In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards, no cap for corporate cards), everyone would still get the benefit of cashless transactions without the processing rake credit card processors and related entities take.

Worth noting that credit card processors do take on credit risk, which for "normal people" is, sure, basically negligible. But black swan events (covid, for example) and fraud attacks (card cashers etc etc) are major issues. This might be mitigated by the dominant form of payments in the regulated marks you mentioned being debit cards, which in some ways flips the equation on risk around. However, this might not sit…

If card processors cared about fraud they would have rolled out chip & pin 20 years ago. They don't and the fees aren't that high because of it. The fees are so high for the profit and the stupid minigames that trick americans into having a wallet full of plastic cards for "savings" and "cashback".

Re: Tech companies are clamoring to give you credit cards

#25

Post by throwaway_pdp09 »

cheonic729 wrote: post #9
est31 wrote: post #7

The entire idea behind credit cards is to force processing fees upon store owners. As a store owner you are required to pay up to 3.5% of your revenue to the processing company (the percentage can be even higher than that if you sell stuff for small amounts, like just a dollar). With cash you can choose your bank and there is more of a free market, while with credit cards you can't get around not accepting certain br…

> The entire idea behind credit cards is to force processing fees upon store owners. No. As a consumer, I enjoy immense value by carrying around zero cash. In fact, I don't even carry around physical cards (thank you Apple/Google Pay).

What is this 'immense value'?

Re: Tech companies are clamoring to give you credit cards

#26

Post by est31 »

dahfizz wrote: post #19
est31 wrote: post #14

Earlier quoted context omitted.

There is a difference between "credit credit cards" and "debit credit cards". Debit credit cards are a bad idea for consumers because of those 22% as well as liabilities when being victim of a crime. But yes, many people treat the limit of those debit credit cards as a way of having money. It isn't though.

Can you explain this a bit more? I have no idea what you mean by "credit credit card" vs "debit credit card".

Here is an FBI employee explaining the difference between the two when a breach happens: https://youtu.be/vsMydMDi3rI?t=2737

A more general article: https://www.investopedia.com/articles/personal-finance/05021...

Re: Tech companies are clamoring to give you credit cards

#27

Post by gonehome »

Shivetya wrote: post #8

I understand some of the appeal of metal cards and the like but this seem short order as the move to contact less payments increases. To be honest the less someone knows about my purchase which includes the brand on the card the better Now I can see the appeal to some, example the Apple card, where pricey items can be paid for at no interest with the added hope they use your card elsewhere. I haven't look into Apple'…

The Apple Card is great - I switched to it and closed all my other credit accounts (even though the others had better overall cash return when factoring in their points value).

I did this for a few reasons.

- Better software: The iOS integration with Apple Card is really good. The second best I've seen was Amex, but they were still a distant second.

- "Daily Cashback" - just automatically putting the 1%/2%/3% back onto the cash card on my phone daily rather than having to deal with the card software/points etc. The time/value return on point optimization is fun, but ultimately just not worth it to me.

- Third party transaction protection: Apple made [edit: Goldman Sachs] agree to not resell transaction data.

- No upsell: Other cards are constantly spamming you with offers to get their checking account, services, etc. I don't want any of these things, often the attempts to disable the emails doesn't totally work.

- Easy cancel: Other cards require you to call and deal with retention services in order to cancel.

Other card services really dropped the ball on this, AMEX in particular is user hostile. Want to use the airplane points? You must pick an airline (not obvious). You want to get the money towards rideshare? You must click the boxes the enable it or you don't get it. Oh - you also get the rideshare money doled out $15/month without rollover to make it maximally hard to use. Paying $550/yr and then feeling like they're screwing you at every turn doesn't create much loyalty. The Chase Sapphire Reserve was probably the best overall card before I switched to the Apple one.

If the other companies actually cared about their users they could have made a much better product. There's huge opportunity in this space to make something that doesn't suck with rewards that people actually want.

Re: Tech companies are clamoring to give you credit cards

#28

Post by 908B64B197 »

milkytron wrote: post #16
908B64B197 wrote: post #3

Earlier quoted context omitted.

> a few financial companies (Capital One) are now seeing themselves and identifying as tech companies. Is it branding or an actual shift? I've seen many companies pivot to being "tech companies" but still didn't have incentives in place to attract real talent, and more crucially that still treated software and tech as a cost center. But hey they had bean bags!

Having worked for banks that have said this, I can say it's branding without much substance behind it. They say this to attract talent. The talent doesn't remain long unless they get into all the politics and butt sniffing that goes on at large established companies. Those that actually produce end up being taken advantage of and credit goes towards the people that manage them.

It's what I observed with banks.

No matter how much the tech contributes to the bottom line, bonus and incentives are still focused on the trading floor and salespeople.

Re: Tech companies are clamoring to give you credit cards

#29

Post by lollolintercha »

toomuchtodo wrote: post #10
est31 wrote: post #7

The entire idea behind credit cards is to force processing fees upon store owners. As a store owner you are required to pay up to 3.5% of your revenue to the processing company (the percentage can be even higher than that if you sell stuff for small amounts, like just a dollar). With cash you can choose your bank and there is more of a free market, while with credit cards you can't get around not accepting certain br…

If the US regulated interchange fees like Europe did (In the EU, interchange fees are capped to 0.3% of the transaction for credit cards and to 0.2% for debit cards, no cap for corporate cards), everyone would still get the benefit of cashless transactions without the processing rake credit card processors and related entities take.

Ha. Other fees nearly always take this above 1%, often closer to 5% and as far as 20% only sub dollar transactions. Other fees are your scheme fees of which there are many, avs fees, and your acquirer fee (the people who take the chargeback risk - e.g. adyen 0.65%)

Re: Tech companies are clamoring to give you credit cards

#30

Post by fotta »

gonehome wrote: post #27
Shivetya wrote: post #8

I understand some of the appeal of metal cards and the like but this seem short order as the move to contact less payments increases. To be honest the less someone knows about my purchase which includes the brand on the card the better Now I can see the appeal to some, example the Apple card, where pricey items can be paid for at no interest with the added hope they use your card elsewhere. I haven't look into Apple'…

The Apple Card is great - I switched to it and closed all my other credit accounts (even though the others had better overall cash return when factoring in their points value). I did this for a few reasons. - Better software: The iOS integration with Apple Card is really good. The second best I've seen was Amex, but they were still a distant second. - "Daily Cashback" - just automatically putting the 1%/2%/3% back on…

small nit: the underlying creditor is Goldman Sachs, not Morgan Stanley :)
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